A Senate Committee inquiry has cast serious doubt on the standard of Australia's air safety regulators, warning of systemic failures.

The committee has been examining the way the Australian Transport Safety Bureau (ATSB) conducts its investigations, and works with other safety agencies.

The inquiry was set up in the wake of a highly criticised report by the ATSB into the ditching of a medical evacuation plane in November 2009.

The flight, operated by Pel Air, ditched into the ocean off the coast of Norfolk Island after repeatedly trying to land in bad weather.

Remarkably, all six people on the Pel Air flight survived the crash, including the patient being taken from Samoa to Australia.

Captain Dominic James was initially praised as a hero, but after taking three years to complete, a report by the ATSB largely blamed him for the crash.

"It was quite unexpected to see that the focus of the investigation was solely upon me," Mr James said.

The Senate Committee has now delivered its own scathing assessment of that investigation.

It found there was little solid evidence to support the view that Mr James was to blame.

Independent Senator Nick Xenophon says the inquiry has found there were two internal reports by the Civil Aviation Safety Authority (CASA) showing it knew about broader safety and management problems at Pel Air.

The inquiry says the reports should have been provided to the ATSB, but were not.

"If they've stuffed up in relation to this, where else are they going wrong, because this raises very serious systemic issues," Senator Xenophon said.

"This report must not, cannot be ignored because the issues it raises are simply so serious."

Liberal Senator David Fawcett says that has been referred to the Federal Police for further review.

"CASA actually have an obligation to make the ATSB aware that documents exist that are relevant to the investigation and to provide those documents," he said.

He and Senator Xenophon agree that the ATSB's report was seriously deficient.

"By ignoring all of the systemic issues, the role of the company, the role of the regulator, you get things like fatigue - by not covering those issues, there are very few if any safety lessons that came out of this report for industry," Senator Fawcett said.

"And it's those safety lessons that actually help prevent future accidents and those who are completely absent from this process."

The inquiry has made 26 recommendations, including redrafting the information sharing agreement between CASA and the ATSB, and re-opening the Pel Air inquiry.

The crash, and subsequent 90 minutes in the water left the flight nurse on board, Karen Casey, with serious nerve damage, psychological trauma, and unable to work.

She says the report must be acted on.

"It seems to be quite clear that there are big problems in our aviation industry," she said.

"The truth has finally been revealed."

Wider problems?

Mick Quinn, a former senior executive at CASA and an air safety expert, says the problems with the Pel Air investigation point to wider systemic failures.

"If we know there are problems with oversight of a particular operator, there's highly likely to be problems with oversight of other operators also," he said.

"So what don't we know - that's the major issue, and that affects everyone, not just Pel Air."

But Senator Fawcett says travellers on big commercial airlines should not be alarmed.

"But I do believe that there are significant improvements we could be making in other areas, where passengers such as people who travel on aircraft as an emergency patient or an air ambulance transfer could have much higher standards and I think industry have a role to play with CASA in determining how those standards should be derived and then enforced," he said.

The report does not vindicate the pilot of the medivac flight, but Mr James says the findings are still a relief.

"There were things I wish I did better on the night, but I don't believe that I operated in a vacuum and the Senate committee also feels the same way," he said.

Both the ATSB and CASA are standing by their actions.

Senator Fawcett says that is disappointing, but not surprising.

"ATSB and CASA, time and again, in the face of quite specific and damning evidence that was drawn from their own records and their own internal documents, have essentially said nothing to see here, move on," he said.

But both agencies say they will give the Senate inquiry due consideration.